Less than two years after it launched, Redbox Instant by Verizon is shutting down. In a notice posted online and emailed to customers, the Redbox Instant team announced that the streaming video service will cease operations at 11:59 p.m. PT on October 7. Information on service refunds will be released on October 10.
Designed to be a rival to Netflix Inc. (Nasdaq: NFLX) in the rapidly growing online video market, Redbox Instant was formed as a joint venture between Verizon Communications Inc. (NYSE: VZ) and Outerwall Inc. ., the parent company of Redbox Automated Retail LLC . In an emailed statement, a Redbox Instant spokesperson acknowledged that the online subscription movie rental service "had not been as successful as either partner hoped it would be." Commenting on what Verizon would do next in the streaming space, the spokesperson added: "We're always looking for innovative ways to serve our customers, but don't have anything further to discuss at this time."
Rumors that Redbox Instant would wind down first emerged in late September. At the time, Verizon declined to comment on the possibility, but poor subscriber numbers and the suspension of new customer registrations painted a dire picture for the joint venture. (See Is Redbox Instant Shutting Down?)
Now that a shutdown is confirmed, Verizon becomes the second major pay-TV provider in the US to cut its losses with an online streaming service. Comcast Corp. (Nasdaq: CMCSA, CMCSK) largely decommissioned its Streampix video offering two weeks ago, deciding instead to fold the service into its main Xfinity app and website. (See Comcast Turns Off Streampix.)
However, while pay-TV providers haven't done well with over-the-top services so far, that doesn't mean they won't keep trying for a winner. Numerous operators have OTT plans for 2015, including AT&T Inc. (NYSE: T), Dish Network LLC (Nasdaq: DISH), and -- once again -- Verizon. Indeed, Verizon CEO Lowell McAdam said the telco would kick off a new OTT service in the first half of next year, using the OnCue assets that the company picked up from Intel Corp. (Nasdaq: INTC). Although Verizon isn't sharing details, it's possible that some of the Redbox Instant team will end up working on the new mobile IP video offering. (See Verizon Plans Mobile TV Service in 2015 and Why Did Verizon Buy OnCue?)
As a side note, Redbox Instant originally stopped accepting new customer registrations several months ago because of apparent credit card fraud issues. However, a spokesperson emphasized that "based on a thorough investigation, we have no reason to believe that any of our customers' information was compromised."
— Mari Silbey, special to Light Reading